MIDF positive on semiconductor industry outlook, reiterates Buy rating on Globetronic

KUALA LUMPUR: MIDF Research expects the semiconductor industry to remain positive, on fresh news that global semiconductor sales (GSS) have breached the US$27bil level in October 2013 supported by bullish sales.
In a note on Friday, MIDF Research said it foes not foresee any slowdown in sales growth momentum for the industry.
“In this respect, world semiconductor trade statistics has revised up the sales prospects of the Americas, Europe and Asia Pacific regions.
“Following the revision, GSS is expected to hit US$316.6b by 2014, up from US$312.9b previously,” it said.
The research house said the sales uptrend was also supported by sales stemming from Europe as well as the Asia Pacific regions.
“While sales in Japan may continue to weaken further, we believe this will be overshadowed by the bullish sales from the other regions,” it said.
The research house noted that book-to-bill ratio has also turned positive, reverting to above the 1.0 times level, after being below parity for the previous two months.
“This was on the back of higher investment being poured. We expect the ratio to be maintained, at the minimum, on the back of higher capex utilisation in the following year,” it said.
Given the bullish sales data as well as the rosy outlook, the research house reiterates its positive stance on the sector.
It has named Globetronic as its top pick for the sector due to its exposure to the tablet and smarphone market, rating the stock with a Buy and a target price of RM4.19.